More shareholder rights or better plumbing?

16 March 2012

Sarah Wilson

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Diversity Divergence: Shareholders Steadfast Amid Pervasive Political Posturing

More rights for shareholders is one of those sure-fire political winners which would seem churlish to object to. But, with the publication of the UK's proposals to fix the "payments for failure" fiasco, it looks like the UK government is going to (again) miss a golden opportunity to give shareholders ALL of the tools that they need to fulfil their stewardship responsibilities.

Proxy plumbing is broken and has been corrupted by anti-competitive and abusive practices

And by that statement we don't mean companies or registrars are to blame, we mean the custodian banks vote service provider tying agreements their exclusively-mandated chain of intermediaries.

This doesn't just impact shareholder but affects companies too. The UK government is proposing some significant rights over UK companies and their directors. However making votes more powerful without making the voting process more secure and transparent only accentuates risk on shareholder remuneration decisions.

As we highlighted in our revelations about investors vote data being sold to third parties before the deadlines, market dominance encourages abuse and holds back competition. Shareholders, not unreasonably, are demanding end to end vote confirmations as well as timely, secure transmission. We agree, it's why Manifest came into existence,  to develop, to innovate and to offer an alternative.

Proposals to strengthen shareholder's voting powers without strengthening the process by which votes are exercised is a job half done. Companies and shareholders may have more in common they imagine in pulling together to drive out bad practices.

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